Cost of Living

Graeme Morrice Excerpts

Wednesday 16th May 2012 Commons Chamber

[Graeme Morrice (Livingston) (Lab)]

It is a pleasure to speak in this debate in support of the Labour Opposition’s amendment.

With the cost of living remaining the primary concern of most families throughout the country, this Queen’s Speech should have started to address the real day-to-day concerns of squeezed households. Soaring energy bills, the increasing price of food and fuel and big rises in the cost of travel are all hitting households hard, but, as we have seen time and again over the past two years, this out-of-touch Government have missed another opportunity to give some relief to hard-working people.

Those people want to know that the Government are on their side, but the coalition has instead offered more of the same failed approach, demonstrating how utterly clueless it is about the real needs of hard-working families in this recession. It has failed to address the cost of living crisis; it has failed to deliver help for hard-pressed families; and it has failed the crucial test of fairness.

Labour would have brought forward measures to help families immediately by addressing the cost-of-living crisis, tackling rip-off prices and creating real jobs for young people. In contrast, this hapless Tory-led Government are adding to the financial pressures that families face by cutting working tax credits, forcing middle-income pensioners to pay more tax and condemning more than 1 million young people to life without work, with the unemployment rate for 16 to 24-year-olds in Scotland, where my constituency is based, standing at 94,000, or just over 23%, in the period from January to March. So the Government are piling the financial agony on to families, when families can least afford it, with some decisions, such as the tax cut for millionaires at the expense of middle-income pensioners, rubbing salt into the wounds.

The Institute for Fiscal Studies, in its analysis of the Chancellor’s autumn statement, stated that median-income families would be worse off in 2015 than they were 10 years ago, with soaring energy bills being one of the main contributing factors. That is borne out by the experience of people in my constituency, with the damaging impact of massive year-on-year increases in fuel bills often highlighted as their single biggest financial headache. The cost of a typical annual dual gas and electricity bill is now £1,310—up by nearly 50% in the past four years alone. Under the toxic combination of a Tory Westminster Government and an SNP Scottish Government, more than one in three households in Scotland is estimated to be living in fuel poverty, including a staggering 65% of single pensioner households—12% higher than the UK average. This dire situation led Citizens Advice Scotland to declare last year that Scotland is now in a “shameful crisis” of fuel poverty.

Despite a mild winter, millions of people are now receiving bigger energy bills than they had planned for. Many with fixed or reducing incomes will struggle to meet these rising bills, and that will result in even more households slipping into fuel poverty. With about 80% of households currently paying over the odds for their energy, there is clearly a massive problem in the domestic energy market that requires an urgent response. However, while voluntary sector groups and campaign organisations such as Which?, 38 Degrees, Consumer Focus and Citizens Advice have taken decisive action to try to tackle the fuel poverty crisis and to help desperate energy customers, the Government have done next to nothing to tackle soaring energy prices.

The Big Switch campaign initiated by 38 Degrees and Which? is a particularly welcome initiative aimed at helping as many consumers as possible to achieve savings on their energy bills by negotiating a collective deal with a supplier. Such mass consumer action has the potential to make an important contribution to securing a fairer deal for energy customers, and I am delighted that the Leader of the Opposition has said that Labour will explore doing something similar to support local communities to achieve better deals on their energy needs. This proactive, co-operative approach, working in partnership with local communities, contrasts sharply with the Government’s approach in sitting back and allowing hard-pressed families to suffer.

The baffling array of tariffs, which now stands at over 400, is one of the biggest frustrations for energy consumers, with 70% saying that they are confused about which tariff offers them the best deal on their energy. In a speech last month, the Deputy Prime Minister heralded a move to force the big six to send their customers an annual update on their cheapest tariffs to try to ensure that consumers have the information they need to switch to a better deal. He described that as a landmark decision, but senior energy company managers have revealed that much of what they agreed with the Government is already being done, and uSwitch warned that consumers would not necessarily be made aware of the “best deal overall”. So while the Government’s agreement with the big six may help some consumers to switch to a better deal, many will still find it difficult to find the best deal for them, and it does nothing to tackle the bigger problem of the stranglehold that the big six has on the energy market.

The bottom line is that the market needs a complete overhaul, but this Government are only tinkering at the margins. Labour will stand up for hard-pressed families and pensioners and end the energy rip-off. We would introduce an energy Bill to break up the dominance of the big six energy companies by requiring them to sell power into a pool, allowing new businesses to enter the market, increasing competition, and driving down energy bills for families and businesses. By forcing energy companies to introduce a new simple tariff structure, we would make tariffs fairer and help all energy customers to get a better energy deal.

We would also require the energy companies, by law, to offer over 75-year-olds the lowest rate available. Such a move would enable more than 10,000 over 75-year-olds in West Lothian, for instance, to save as much as £200 on their energy bills, giving real, practical support to those who need it most. That kind of tangible, affordable measure demonstrates how it is still possible to deliver fairness, even when money is short, by offering ways to help families immediately. It is also indicative of how Labour Members would have acted on the priorities of hard-working people had we been writing this Queen’s Speech.